Yesterday the Mississippi Senate passed a bill legalizing Bitcoin and cryptocurrency mining in the state.
Although mining was not previously banned in Mississippi, it will now be framed with clear and specific regulations.
Crypto: the Digital Asset Mining Act
The bill has been explicitly called the Mississippi Digital Asset Mining Act, and its specific and peculiar purpose is to regulate Bitcoin and cryptocurrency mining in the state.
However, it is worth noting that since Ethereum is no longer minable, due to the move to Proof-of-Stake, the only major minable cryptocurrency left is Bitcoin (BTC), this is because the other minable cryptocurrencies, like Litecoin and Monero, are second or third tier. Moreover, the main problem of crypto mining, namely high energy consumption, is concentrated on Bitcoin mining, seeing as overall the mining of all the other minable cryptocurrencies combined has enormously lower consumption.
So, although the bill passed by the Mississippi Senate was called the Digital Asset Mining Act, it refers primarily to Bitcoin mining.
The text of the bill on Bitcoin mining
The text of the bill states that crypto mining has created thousands of jobs by providing billions of dollars of positive economic value to individuals and businesses in the United States. It is also mentioned that since the 2021 ban in China, crypto mining has grown significantly in the US.
According to Mississippi lawmakers, crypto mining would have the potential to stabilize the power grid and provide revenue for infrastructure projects across the state. That is why they want to explore the potential of this activity, protecting the right of individuals and companies to carry it out within a certain regulatory framework.
In other words, they believe it is possible that Bitcoin mining, if done in accordance with the law and in compliance with the requirements imposed by the state, can even be beneficial to the citizenry and businesses, not only because it can produce revenue, but also because it can help in particular to more efficiently manage the power generation and distribution grid.
For these reasons, the Mississippi Digital Asset Mining Act explicitly makes it legal in the state to run blockchain nodes based on Proof-of-Work, and to start crypto mining activities in industrial areas.
More importantly, it prohibits the imposition of discriminatory energy tariffs on mining farms, and protects miners from being considered financial companies that engage in cash transactions.
The status of the bill
This bill had previously been introduced in the House by Senator Josh Harkins, and now that it has gained Senate approval, it just still needs to get the final green light from the House to take effect.
It is expected that if it is approved by the House which is actually pretty much a foregone conclusion), and approved by Governor Reeves, the new law should go into effect on 1 July 2023. Governor Reeves is a Republican, and since the majority in both the Senate and House are also Republican it is safe to assume that there should by now be no real obstacles to final passage of this bill.
Once passed it could bring to Mississippi crypto mining companies from other states where regulations are more stringent, limiting, or even repressive.
For example, in New York State, Bitcoin mining has been completely banned in the event that the exclusive use of non-polluting energy sources cannot be demonstrated.
It is worth noting among all 51 states in the US, Mississippi has by far the lowest GDP per capita. Indeed, it is the only US state in which the quarterly per capita GDP is less than $50,000 ($47,500), with the second highest (Arkansas) having more than $54,600. It is enough to mention that other states that are not particularly wealthy, such as Tennessee, have close to $70,000, while the wealthiest, excluding Washington DC, have about $100,000.
It is not surprising, therefore, that the state of Mississippi is trying to encourage industrial development in its territory, perhaps even through Bitcoin mining.
Bitcoin mining in the US
By now the US is the single country in the world with the most hashrate in Bitcoin mining.
However, there are states, such as Texas, that are particularly supportive of mining, but others, such as New York, that are fundamentally against it.
There are two discriminating factors.
The first is the availability of electricity, and therefore also its cost. Where, as in Texas, large amounts of cheap power are available and the attitude is more open, whereas where power is scarcer or more expensive they prefer to limit its consumption by mining farms.
The second is the environmental impact. There are states, such as Texas, that are not very likely to be concerned about environmental impact, while others, such as New York, are more sensitive to the issue.
Most certainly, however, states such as Mississippi, meaning those with lower average incomes than others, are among those most interested in exploiting this activity for mere economic purposes.